Full text of H.16 Capital Market Developments : July 18, 1960

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C,

Not for Publication
j H.Ik

o

__
DECONTROLLED AFTER SIX MONTHS

j

July 18, I960.

; CAPITAL MARKET DEVELOPMENTS
iy THE UNITED STATES AND CANADA
Part I - United States
Large public security financing
totaled $3.20 million for corporations and
local governments. This week, the volume
to be quite small. The calendar includes
issue for $20 million and two large State
with total proceeds of $55> million.

for new capital last week
$39 million for State and
of new financing is expected
only one large corporate
and local government issues

Long-term bond yields - Changes in bond yields were mixed,
but minor last week. Yields on State and local governments increased
while those on corporate and U. S. Government obligations declined.
High-grade coiporate and U. S. Government bonds reached new lows for
the year.
Offering yields on new coiporate issues also declined slightly
last week. A new A-rated, first mortgage electric utility issue was
offered to investors to yield li.88 per cent—5 basis points lower than
that for a comparable issue offered a week earlier.
Mortgage and bond yields - Secondary market yields on certain
FHA-insured 5-3/4 per cent new home mortgages declined slightly in June,
At 6.19 per cent, they were the lowest this year, but were about 50
basis points above last year. Since yields on new corporate bonds
declined substantially, the spread between these bonds and mortgage
yields widened somewhat.
Short- and intermediate-term interest rates - The average
yield on Treasury bills rose last week, while that on intermediate-tena
Government issues declined further. Other major money market rates
were unchanged.
Stock prices - Standard and Poor's index of 500 common stocks
declined 2 per cent last week, closing at 56.05 on July 15, the lowest
since early June. Trading activity also declined last week with the
daily volume averaging 2.6 million shares a day, the lowest since midApril.
More detailed information concerning recent capital market
developments is presented in the attached exhibits. Developments in
the Canadian capital markets are presented in Part II at the end of this
report.
Capital Markets Section,
Division of Research and Statistics,
Board of Governors of the Federal Reserve System.




L O N G - T E R M B O N D YIELDS

HIGH-GRADE

t

iQ]

/Vf

U.S. GOVUNMINT

i
1
1.
WE„R-<5 R A D | .

lifiL1

rv-U

A>

/

/

J

COI

/A

V Jn

/'

M

iI

f
1/ J

V \

J
1957

S

D

V

M




J
1151

S

D

\

V

V A\j

5.0

1 AND

M

J
~TT5T~

To"

Ts~
S

D

M

J
MiO.

SI

D

ll.llt

-3-

Exhibit B - Tables for Exhibit A
Long-term Bond Yields
High-grade

Date

Spread between
U. S. Govt, and
State and
Corporate
Aaa
local Aaa

State and
local govt.
Aaa y

Corporate
Aaa 1/

U. S. Govt,
long-term 2 /

2.65 (l|/23)
ll.llt (9/27)
3.55 5/2

2.15 (8/6)
3.76 (10/18)
3.07 (V25)
14- 37 (12/31)
3.83 (1/2)
IU2 (1/8)
3.87 (7A5)

i.90 (9/2)
3.1*5(8/29)
2.6U (5/1
3.65 (9/W
3.06 (3/26)
3.53 (1/7)
3.28 (V7)

.30
.60
.22
.50
.16
.56
.19

3.96
3.97
3.96
3.91
3.87

3.38
3.30
3.30
3.30
3.32

.149
.1*8

(Per cent)

1951
1957
1958
1959
i960

- Low
- High
- Low
-High
Low
- High
Low

June 17
June 2h
July 1
July 8
July 15 2/

1».& (12/31)

lt.09 (1/9)
I1.6L (1/29)
It. U3 (7/15)
U.145
1U5
it.lA
i».to

.30
.hi
.3k

.92
.53
.92
.55
.65
.67
.66
.61
.55

.he

.53
.56

Lower-grade

Date

Corporate
Baa 1/

State and
local govt.
Baa 2/

Spread between
Aaa and Baa
State and
Corporate
local govt.

(Per cent)
195U
1957
1958
1959

-

Low
High
Low
High
Low
1960 - High
Low

a m '1
ts
re
5.36 (2/12)

June
June
July
July
July

5.26
5.27
5.28
5.27
5.26

17
2h
1
8
15 e /

3.U1 (12/31)

5.17 U / 8 )

2.93 (8/5)

I'lihT
3.92 (3/26)
k.k6 (1/7)
li.22 (V7)

.52
1.27
.77

ill

.81*
.71

It. 25

.81
.82

h.2h
lt.27

.83
.83

k.2h
it.2U

M

.96

1.21

.93
.98
.79
.97
.92

I
.95

0/ Preliminary.
\J Meekly average ef dally figures. Average term of b*da lneluded is 26-26 years.
2/ Weekly average ef dally figures. The series lnoludee bonds due or callable In 10 years ep more,
3/ Thursday flguree. Only general obligation bonds are lneluded, average tern le 20 years.
Note.—Hlghe and lews are for Individual aeries and may be on different dates far different series.




A

'
7

f
SHORT-

AND

INTERMEDIATE-

TERM

INTEREST

RATES

GOVERNMENT




MARKET

YIELDS A / T

k

Exhibit D - Tables for Exhibit C
Short- and Intermediate-term Interest Rates
Government
Date

Discount
rate 1/

Yields
6-month
bills 2/

3-month
bills 2/

3-5 year
issues 2/

Spread between yields on
3-month bills and yields on
6-mo. bills 13-5 yr. issues

(per cent)
19$U
1957
1958
1959

-

Low
High
Low
High
Low
1960 - High
Low

i S

June
June
July
July
July

3.50
3.50
3.50
3.%
3.50

I?
2k
1
8
15 b/

1.50
3.50

.61 (6/11)

-

1.66 (V30)

3.6k (10/18)

—

I1.OI1 (10/18)

A

a

M

O

T

tSffi!l:S ! &
I

S

M

i f , t o

3. So 2.18 (7/11) 2.52 (6/17) 3.76 (7/15)
2.31
2.39

2.18

2.27

2.1a

2.52

3.99
k.01
3.99
3.87
3.76

2.76

2.6k
2.85
2.87

.26

•66
.86

•Olt

.79
.19

1.1*2
•1«0
1.81

I

1.68
1.62
1.81
1.60

:S.

.21

.38

Private

Date

Stock Exchange
call loan 1/

Spread between 3-month
Prime
Finance company Treasury bill yield and
rate 1/
finance company
paper 2/
paper rates
(per cent)

1951
1957
1958
1959

Low •
High
Low
High
Low
1960 - High
Low
June
June
July
July
July

-

17
2k
1
8
15 2/

3.00

L50

3.00

it. 50
3.50

5.00
k.oo

S3
5.00

5.00
5.00

5.00
5.00
5.00
5.oo

5.00
5.00
5.00
5.00
5.00

5.oo

1.25 (12/31)

3.88 (11/16)

1.13
U.88
3.00
5.13
3.00

(8/8)
(12/31)
(V6)
(1/22)
(7/15)

0 (12/18)
.59 (7/19)
-.35 (8/29)

.86 (10/9)

.13 (12/W

1.02 (3/25)
.22 (Vl5)

3.05,

:
8
.82

3.00

.*59

3.00
3.00
3.00

1/ Weekly rate shown Is that In effect at end of period. Dteootmt rate le for Federal Reserve Bank of Hew York.
Stoek exchange call loan rate la going rate en call loans secured ty customers' stock exchange collateral at
New York City bank#. Prime rate le that charged by large banks on short-term loans to business borrowers of
the highest credit standing,
y Market yield* weekly averages computed from dally cleslng bid prions. Series of 3»8 year Issues consists of
selected notes and bond*.
y
Average of dally rates published ty finance companies for directly placed paper for wrylie maturities In the
90-179 day range.
Mote.—Highs and lows are for individual series and may be on different dates for different series. For spreftde,
nigh refers to widest, and low to narrowest.




STOCK

MARKET




CHANGE IN SERIES

-7-

Exhibit F „ Tabley lor Exhibit E
Stock Mailtet
Common
Trading
volume y
yields 2/ (millions
(per cent) of shares)

I960 - High
Low

1957-1959 - High
Low

60.51
39.78
59.50
54.24

3.07
4.66
3.18
3.51

4.3
1.4
3.9
2.JU

Stock market customer credit
Cu st omer sM
Bank
debit b a W loans to
ances 4/ ("others" u
(Millions of dollars)
4,764
3,401
1,373
2,W2
1,060
3,198
1,167
it,132
3,021
1,111

May
June
July 1
July 8
July 15 2/

55.22
57.26
57.06
57.38
56.05

3.1*2
3.35
3.38
3.36
3.a

3.3
3.5
3.0
3.0
2.6

4,132
n.a.
n.a.
n.a.
n.a.

Date

Stock price
index 1/

Total

3,021
n.a.
n.a.
n.a.
n.a.

1,111
1,132
1,132
1,13k
n.a.

n.a.--Not available.
g/ Preliminary.
1/ Standard and Poor's <-«mposlte Index of 500. common stocks, weekly closing prices, 1941-43=10. Monthly data
are averages of dally figures rather than of Fridays' only. Highs and lows are for Fridays' data only.
2/ Standard and Poor's composite stook yield based on Wednesday data converted to weekly closing prices by
Federal Reserve, Yields shown are for dales on which price index reached Its high or low.
3/ Averages of dally trading volune on the New York Stock Exchange.
4/ tod of month figures for member firms of the New York Stock Exchange which carry margin accounts; excludes
balances secured by U. S. Government obligations.
5/ Wednesday figures for weekly reporting member banks. Excludes loans for purchasing or carrying U. S.
Government securities. Prior to July 1, 1959, such loans are excluded only at banks In New York and Chicago.
Weekly reporting hanks account for about 70 per cent of loan# to others. For further detail see Bulletin.

Mortgage and Bond Yields 1/
Date
1953-1958 - High
Low
1959 - High
Low
i960 - January
February
March
April
May

FHA
mortgages 2/
5.63 (11/57)
1.56 (2/55)

6.23

5.57

6.2b
6.23

6.22
6.20
6.20
6.19

Aaa corporate
Spread between new
corporate bonds and
bonds 1/
New 3/ |Seasoned U/ FHA mortgagee|Seasoned bonds
4.81 (6/57) 4.12 (9/57)
2.74 (3/54) 2.84 (4/54)
5.29
4.58
4.12
4.29
4.95
4.96
4.66
4.78
4.86
4.69

4.61
4.56
4.49
4.45
4.46
4.45

1.96
.54
1.29
.83

.90
-.12
.77
.15

•1.29
1.27
1.56
1.42
1.34
1.50

.34
.40
.17
.33
.40
.24

1/ Neither mortgage nor bond yields take into account servicing costs which are much higher for mortgages than
bonds. Generally, bonds pay lntereot semi-annually; mortgages, monthly. Mortgage yields, If computed as equivalent
to a semiannual Interest investment, would be slightly higher than given In the tables
2/ Based on FHA field-office opinions about average bid prices In the private-secondary market for new-home
mortgages for Immediate delivery. Since late 1955, data relate only to 25-yeor mortgages with downpaymenta of 10
per cent or more, weighted by probable volume of transactions. Yields computed by FRB, assuming 25-yenr mortgages
are paid off in 12 years. Danhed lines Indicate periods of adjustment to changes in the contractual interest rate.
3/ First National City Bank of New York. Averages of offering yields of all new Issues of publlely-soliTbonds
rated Ana, Aa or A by Moody's Inventors Service (except serial and convertible issues and offerings of natural gas
and foreign compiinlec) weighted by nlze of Issue. Yields on Aa and A Issues are first adjusted to an Aaa basis
by the spread between yields of outstanding bonds In these categories and those on Ana-rated bonds. The series reflects changes in industrial oornp osltlon, maturity, tape, etc. of new offerings.
4/ Moody's Inventors Service. Monthly averages of daily data. See Exhibit B.




Exhibit G
Long-term Corporate and State and Local Government
Security Offerings and Placements
(In millions of dollars)
New capital
I960
January
February
March
April
May
July
August
September

577
715
860

821
738
61*6

2/789
p/570
e/1,100

89 h
785
887

e/675

535
7li0
703

October
November
December
1st
2nd
3rd
bth

quarter
quarter
quarter
quarter

1st half
Three quarters
Year

Corporate 1/
1 1959
1

1956

I960

728

736

1,5532/
i,ito

8

n
2/531
g/950
e/550

1

'$h0
1,11k

State and local 2/
1
1958
1
1959
63?
858
61*6
932

1,32

g'«

li6'5

879
86b
900

862
518
920

2,351
e/l*,b59

2,20b
2,567
1,979
2,61*2

3,139
2,623
2,760
2,300

1,93b
e/2,211*

e/k, 610

4,771
6,750
9,392

S
10,823

e/l*,lb8

-519
li55

2,11(3—

IIS
1,571
1i,671I
6,222
7,793

812

B
798

895
551

806
1*03
651
1*56
l*7b
b35
2,276
2,21*1*
1,860
1,365
b,520

6,380

7,716

Excluding finance companies h/
1st
2nd
3rd
Lth

quarter
quarter
quarter
quarter

1,722
e/2,159

Year
1/
2/
3/
hj

2,899

1,999
2,la2
1,716
2,503

2,731
2,213

8,630

10,1*29

2,586

g/ Preliminary.
Securities and Exchange Commission estimates of net proceeds.
Investment Bankers Association of America estimates of principal amounts.
Includes $718.3 million AT&T convertible debenture issue.
Total new capital issues excluding offerings of sales and consumer finance
companies.




H.lit

Exiiibit ti

-9-

Other Security Offerings \j
(In millions of dollars)
Long-term
Foreign government 2/
Federal agency 3/"
I960
I 1959
I 1935"
i9gr
I960
I
1959
JanuaryFebruary
March

*
175
70

April
May
June

33
31

81

60

196

2

1

July
August
September

35,

October
November
December

33
30
70

April
May
June

268

190

128
295

9
5
17

'

3 #

E/267

July
August
September
October
November
December
Year

563
1*11
215
216
167

399
235

3k3
358
ll,179

175
523

iS-

ll

66

992

g

70?

8-

359

500

SL2

I489

,509.

W 6
075

289

hp

727
365
665

E

3,910

2,321

Federal agency 3/""

26a

369

I6lt

220

58
X

233
1*60
273

1,163
251

354

120

Short-term
State and local government U/
January
February
March

199

Hi8

198

1

547

s;

139

85

Year

182

53

B!

371
208
II4I4
209
161
329
-^37

206
330

288

h$\x
Hit
137

6,01,7

3,096

E/ Preltsilinry.
V Data presented in this exhibit differ from those 1* Exhibit E in that refunding issues, an wall as new
capital issues, are Included. Long-term securities are defined as those matuv-'.ig in n<>re thar. 011a yaar.
2/ Inoludcs securities offered in the United States by foreign governments and their eubdt visions and by
ln'.ernnt'.onal organisations. Source J Securities and Sxtihr-nge Commission,
3/ Issues not guarant«ad by the U. S. aov-irnner.L. Source: long-term, Securities and Btehangt Cor.nl ssloni
short-term, Federal Reserve,
4/ Principally tax and bond anticipation not*s, warrants or certificates ar.A Public Housing Authority
R0
™ 30,1,8 ln3ta n»es PHA rotes lnaludtd may have a somewhat longer torn than one year. Sourcet Bond Buyer.




Exhibit I
Large Long-tern Public Security Issues for New Capital
(Other than U. S. Treasury) 1/
Proceeds of Large Issues Offered
(Millions of dollars)

Month

1959 - June
July
August
September
October
November
December
I960 - January
February
March
April
May
June

Corporate

State and
local government

281*
110
363
199
1*00
1*21
230
279
262
381*
309
139
1*1*2

635
191*
263
211*
291*
163
217
388
283
225
370
231*
561

Other 2/

60
50
98
175
20

.

70
100
320
191
71
28
30

Large Individual Issues Offered July 1 through 15

Issuer

Type y

Coupon
Amount
rate or Offering
(millions
Maturity
net inter- yield
of
est cost
dollars)

Rating

CORPORATE
Illinois Bell Telephone Ckx letratg.bds. 50.0
Commercial Credit Co.
Sr. notes
50.0
Northern Illinois Gas Co, 1st mtg. bds. 30.0
Deb.
American Can Co.
1*0.0

1997
1979
1985

lt-7/8
k-3/h
4-5/8

It. 7 5

1I.83
l*.6o
h.70

1990

h-3/k

1963-92/69
1961-80

3.92
3.01

2.90-ii.05^ A
2.90-3.102/ Aaa

1979
1962-79
1967-85
1961-89

1*.19
3.60
3.53
3.86

i*.l5
Aaa
2.1|0-3.65„/ A
2.20-3.651/ Aa
2.20-ii.00 A

STATE AND LOCAL GOVERNMENT
Salt River Proj. Agric.
Imp. & Pwr. Dist., Ariz.
State of North Carolina
Dist. of Columbia Armory
Board 6/
Chicago, Illinois
Santa Clara Co., Calif.
Nassau Co., New York
OTH55

None




Rev.-Ut. 19.0
G.O.
10.7
Rev.-Ut.
G.O.
G.O.
G.O.

19.8
37.0
11.5
27.1

1-2
Footnotes
Includes corporate and other security offerings of $l£ million and over;
State and local government security offerings of $10 million and over.
Includes foreign government and International Bank for Reconstruction and
Development issues and non-guaranteed issues by Federal agencies.
In the case of State and local government securities, G.O. denotes general
obligations; Rev.-Ut., revenue obligations secured only by income from
public utilities; Rev.-Q.Ut., revenue bonds secured only by revenue from
quasi-utilities; Rev.-S.T., revenue bonds secured by revenue from specific
taxes only; Rev.-Rent., revenue bonds secured solely by lease payments.
1992 maturities not reoffered.
1961-70 maturities not reoffered.
Interest on these securities is not exempt from Federal income taxation.
1/h per cent bonds of 1982 not reoffered.




Exhibit J
Forthcoming Large Long-term Public Security Offerings for New Capital
(Other than U. S. Treasury) 1/
Expected Proceeds from Forthcoming Large Issues
During month following
Subsequent to
date shown
date shown
State and
State and
Corporate local govt. Other 2^ Corporate
local govt. Other 2/

Date of
computation
1959 - June 30
July 31
Aug. 31
Sept. 30
Oct. 30
Nov; 30
Dec. 31
I960 - Jan. 29
Feb. 29
Mar. 31
Apr. 29
May 31
June 30

165
238
198
37 U
385
226
210
207
301
299
202
1*83
237

1W
356
385
270
115
295
1*1*5
210
255
250
21*3
277
180

50

272
305
517
691*
509
271
280
252
372
3W*
357
553
1*55

25
70
30
1*5
35
30
30

Forthcoming Large Offerings, as of
Issuer

Type .

500
14)6
1*02
1*70
336
1*85
51*5
310
385
280
258
502
380

5b
25
70
35

60
30

July 15

Amount
Approximate date
(millions
of offering
of dollars)

CORPORATE
Z State Loan & Finance Co.
Southern Counties Gas Co.
Seaboard Finance Co.
^-Southwestern Bell Telephone Co.
Natural Gas Pipeline Co. of Am.
Natural Gas Pipeline Co. of Am.
El Paso Natural Gas Co.
Consumers Power Co.

S.F. deb.
1st mtg. bds.
S.F. deb.
Deb.
1st mtg. bds.
Pfd. stk.
Com. stk.
Conv. deb.

,

International Harvester Credit Corp.
Texas Eastern Transmission Cozp.
Commerce Oil Refining Corp.
Trustors1 Corp.
Liberian Iron Ore, Ltd

Deb.
Deb.
Deb., bds. & com.
Partif. cert if.
Bds.. & stk.

July 20
July 27
Aug. 2
Aug. 3
Aug. 8
Aug. 8
Aug. 11
(rights expire)
Aug. 12
, 38.1
(rights expire)
Aug.
50.0
Indefinite
25.0
1*5.0
Indefinite
1*0.0
Indefinite
-Indefinite
30.0
20.0
23.0
1*0.0
100.0
25.0
15.0
30.0

STATE AND LOCAL GOVERNMENT
Carmen-Smith Hydro-Elec. Pnoj., Ore.
Washington Toll Bridge Auth.
^Houston, Texas
Chesapeake Bay Bridge & Tunnel Comm.
OTHER



Rev. -Ut.
Rev.-Ut.
G.O.
Rev.-Ut.

25.0
30.0

10.5

200.0

July 19
July 20
July 27
Indefinite

<J-2

-13-

Footnotes
*—Included in table for first time.
1/

Includes corporate and other issues of $15 million and over; State and
local government issues of $10 million and over.
2/ Includes foreign government and International Bank for Reconstruction and
Development issues and non-guaranteed issues by Federal agencies.
Note. —Deletions for reasons other than sale of issue: None.




-Ik-

Exhibit K
Yields on New and Outstanding
Electric Power Bonds, Rated Aa and A 1/

Date

_1952-1959 - High
Low
1959 - July
Aug.
Sept.
Oct.
Nov.
Dec.
1960 - Jan. 7
Feb. 25
26
Mar. 15
16
18
29
Apr. 6
8
14
21
27
May 10
12
25
June 17
28
29
July 8
13

A-rated offering yields
Aa-rated offering yields
Amount above
Amount above
Actual
Actual
seasoned yields
seasoned yields
(per cent)
(per cent)
(basis points)
(basis points)
5.30 (12/8/59 )
2.93 (3/31/54)
*4.93

4.83

5.132/
*5.08

*5.30

87
-3
31

23

36
42

63

5.08
5.10
4.90 2/
4.73^

44
46
32
17

4.85

33

4.94

39

4.95
4.88

39
32

4.82
4.84

25
27

5.65 (9/18/59)
3.00 (3/17/54)

123
-15

5.07

17

*5.65
5.33

60
43

5.45./
5.30=/

51
28

5.00
4.93

11
7

4.98

21

5.30

50

5.10
5.20

26
33

4.95

11

4.93
4.88

11
8

*—Single observation, not an average.
1/ Covers only 30-year first mortgage bonds, as reported in Moody's Bond
Survey. Except where indicated, the actual yield figure and the amount above
seasoned yields are averages of offerings during the Indicated period and of
the differences between these new offering yields and yields on seasoned issues
of similar quality for the same day. Average maturity for the seasoned issues
varies from 26 to 28 years.
2/ Provides for a 5-year period during which issue may not be called for
refunding at a lower coupon rate. Monthly averages so marked include one or more
issues with such a provision. Other issues have no such provision.




July 15, I960
Part II - Canada

-15-

For the fifth consecutive week, Treasury bill rates rose in Canada:.
Bond yields also had a rising tendency but were well below early June levels.
The net incentive to hold Canadian Treasury bills rather than United States
bills remained at nearly 0.90 per cent per annum (with the exchange risk
covered). The Canadian dollar moved up fractionally during the past week.
The forward Canadian dollar showed a slight discount early in the week but
closed the week at parity with the spot dollar. Industrial stock prices
dropped sharply during the week on the Toronto and Montreal exchanges5
however, prices in Toronto turned up after Wednesday.
Money market conditions. The average yield on the 3-month Treasury
bill at last Thursday's auction rose 7 basis points to 3.2k per cent from
3.17 per cent a week ago. The 6-month bill rose by 10 basis points to
3.U5 per cent compared with 3»35> per cent the previous week. During the
week, the general public bought $2U million of Treasury bills; the chartered
banks sold the same qmount. The Bank of Canada decreased its bill holdings
by $2 million. The average closing rate on day-to-day loans during the week
was 3.28 per cent compared with 3.13 per cent the week before.
During the week the yield on the Canadian bill (with exchange risk
covered) was 0.87 per cent above the yield on the United States bill.
Bond market conditions. Bond yields had a rising tendency in most
maturities. The spread between selected comparable Canadian and United States
securities (Thursday yields for bills and Wednesday yields for bonds) were
as follows (figures in parentheses refer to the previous week):
0.87
0.77
0.86
1.0U
1.23

per
per
per
per
per

cent
cent
cent
cent
cent

on
on
on
on
on

a 91-day bill (0.83)
a 182-day bill (0.1|2)
an 8-year bond (0.60)
a 20-year bond (1.02)
a 35-year bond (1.27)

During the week the general public decreased its holdings of bonds by $15
million; the Bank of Canada bought $12 million and the Chartered banks $6
million.
On July 8 a two part $50 million Province of Quebec issue was
announced as follows: 5-1/2 per cent debentures due August 15, 1968, to be
offered at par; 5-1/2 per cent debentures maturing August 15, 1981 (non-callable
until 1979) to be offered at 99-1/2 to yield 5»5U per cent. The issue was
heavily oversubscribed. A Province of Saskatchewan $9 million loan offered
on the Swiss market was also oversubscribed. British Columbia residents are
being given preference in the distribution of a $15 million, 5 - 3 A per cent,
25-year British Columbia Telephone issue priced at 99 to yield 5.28 per cent.




-16-

•

Stock market conditions. Prices of industrial stocks on the
Canadian exchanges declined early last week but the Toronto exchange
regained part of the loss later in the week as noted in the following table:
Toronto
I960 - High
Low
July 9
11
12
13
1U
15

»

Montreal

New York
Standard & Poor

532.91
1*81*.60

320.0
277.9

65.02
57.00

1*90.60
U86.75
l*81*.o6
W.75
1*86.38
1*88.06

276.0
27U.9
272.3
271.1*
271.8
270.9

61.00
60.1*0
59.70
59.52

$9.Sh

59.1*

Exchange rate o The Canadian dollar fluctuated within narrow limits
during the week and closed at 102*03 on Friday compared with 101.92 a week ago.
The 3-month forward dollar was at a small discount early in the week but closed
at par with the spot rate on Thursday.
Canadian Dollar Rates
(.i* UoSo cents;

July 8
11
12
13
lit
15

Spot rats

3-»onths
forward

101.922
102.063
101.969
102.000
102.031
102.031

101.938
102.01*7
101.906
101.981*
102.031
102.031

Mortgage loans and housing construction. Housing starts in the first
5 months of this year were 35.6 per cent below the same period last year; starts
for the year are expected to be about 100s000 compared with 151*,000 in 1959.
The Canadian Construction Association stated that over-building in the past years
through government assistance to counter unemployment has already left a supply
of unsold houses in the larger cities.
In the first quarter of I960, National
Housing Association approvals have decreased to $21.7 million (1802 units)
compared with $97.6 million (8,887) units) the year before. (See Table) NHA
funds were exhausted in October 1959 and no further applications were accepted
at that time. In March of I960 the Government announced a reduction in NHA.
funds to about half the 1959 level (see Capital Market Developments March 21,

I960).

British Commonwealth Section
Division of International Finance




Selected Canadian Money Market and Related Data
RqddlT
3-mo. discount
g
forward premium(-t-)^

3-mo. Treaa. bills
Canada
, Spread
y
U.S^r over U.S.

6.16
5.1U
2.65

U.63
2.19

2.96
0.30
0.90
-0.69

105.27
101.31

June 23
30
July 7
Hi

2^98
3.07
3.17
3.2U

2.39
2.19
2.3U
2.37

0.59
0.88
0.83
0.87

101.8U
102.03
101.8k
102.03

U.U9

2.80

Net incentive to
h

<

»

105.51

1 9 # - High
Low
I960 - High
Low

3.25

-17-

102.58
—

101.91
102.05
101.86
102.03

0.31
-0.72

0.9b
-0.57

0.2U
0.06
0.06
0.0

0.83
0.9U
0.89
0.87

a/ Average yield at weekly tender on Thursday.
'
—
—
%J Composite market yield for the U.S. Treasury bill on Thursday close of business,
c/ In U.S. cents.
<y Spread between spot rate and 3-month forward Canadian dollar on Thursday
closing, expressed as per cent per annum.
e/ Spread over U.S. Treasury bill (column 3), plus 3-month forward discount or
premium (column 6).
Selected Government of Canada Security Yields
6-mo. Treas. bills
Spread
Canada
u T i /
1959 - High
Low
1960 - High
Low
June 23
30
July 7
1U

6.21

5.11
5.33
2.89
3.19
3.23
3.35
3.U5

Intermediate
bonds (8 yr.)

'

S

t

u

M

Long-term bonds
{,20 year}
Spread
Canada
uTiz
5.05

5.37

0.85
-0.69
o.Uo

U.50
5.55

U.U9
U.50

0.62

U.50

0.77

U.5U

0.1*2

J

U.5U

l.ii

1.22

0.21

0.87

0.U3
o.U5

0.99

0.60
0.86

1.01

1.02
1.0U

U.73

5.28
U.90

U.96

h*9k
U.9U
U.90

Average yield at weekly tender on Thursday.
Spread between Canadian auction rate and composite market yield of U.S.
on close of business Thursday.
c / Government of Canada 2 - 3 A per cent of June 1967-68.
a/ Spread over U.S. Government 2 - 1 / 2 per cent of 1963-68.
e/ Government of Canada 3 - l A per cent of October 1979.
Spread over U.S. Government 3 - l A per cent of 1978-83.
Government of Canada 3 - 3 A per cent of Septeafcer 1996 - March 1998.
' Spread orer U.S. Government of 1995*




ovegy

1.61

0.98

1.28

1.25
1.27
1.23

Canada: Changes in Distribution of Holdings of Canadian
Government Direct and Guaranteed Securities
(millions or Canadian dollars, par value;
Bank of Canada
Treas.
bills
Bonds
May 11
18
23

June 2
9
16
23
30
July 7
1U

- .3
- 15
0
- 5U
- i
+ 20
- h
+ 5
+ 18
- 2

+

+
+
+
+
+

Government
Total

0
h
k
U8
0
13
13
5
U8
12

Chartered banks
Ttbss#

bills
+
+
+
+
+
+
-

+ 2
- 8
- 3
- 2
- 9
-12
- 17
0
+ 13
- 2

Bonds

Ik
7
Uo
32
9
Ul
5
U6
21
2h

+
+
+
+
+
+
+

2
17
1
8
5
5
2
11
27
6

General pnbllo
savings Treas*
bonds
blllk
:Bonds
-

-

8

2

+
+
+

26
6
39
U
9
52
1
Uo
k9
2h

Source: Bank of Canada, Weekly Financial Statistics*

Residential Construction and Mortage Loans
Approved Loams
(mil. of Canadian dollars)

Total Units
(number of Units)

NHA

Other

Total

Other

Total

1959 I
II
III
IV

97.6
221.3
222. k
133.U

69.2
105.6
90.7
63.3

166.8
326.9
313.1
196.8

8,887
20,081
19,792
12,166

10,103
111,522
12,282
8,167

18,990
3k,603
32,07k
20,613

Total

67a. 7

328.9

1003.6

60,926

15,35k

106,280

I960 I
April
Source:

21.7
18.6

—

Statistical Summary, Bank of Canada.




NHA

1,802
1,611

—

—

+
+
+
-

0
15
5
73
3
11
U
17
25
15

C A N A D A - UNITED STATES
Monthly'

GOVERNMENT

LONG

INTERMEDIATE

TERM G O V E R N M E N T




TERM

BOND

BOND

YIELDS

YIELDS

(20

(8

YEARS)

YEARS)